1992 Reprint excerpted from Public Notice, April 11, 1986
(FCC 86-161),
which was published at 51 FR 21800, June
16, 1986 [7 FCC Record 827]

The Commission has become aware of significant uncertainty and
controversy concerning various aspects of Commission and statutory
policy relating to commercial underwriting on
noncommercial stations. As a consequence, we have reviewed the
existing policies, focusing on ... : (1) the broadcast of
announcements relating to goods and services for
which consideration is received by the station; (2) enhanced
underwriting and donor announcements; (3) the offering of
program-related materials; .... [Public Notice continues after the Table of Contents]

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Section 399B of the Communication's Act of 1934, as amended, and
Sections 73.503(d) and
73.621(e) of our rules, specifically proscribe
the broadcast of announcements by public broadcast stations which promote the sale of goods and services
of for-profit entities in return for consideration paid to the station. These rules,
however, permit contributors of funds to the station to receive on-air acknowledgements. The
Commission has articulated specific guidelines which emphasize the difference between
permissible donor and underwriter announcements and commercial advertising. See
Commission Policy Concerning the Noncommercial Educational Nature of
Educational Broadcasting Stations, 97 FCC 2d 255 (1984) (hereafter referred to as "1984 Order");
Commission Policy Concerning the Noncommercial
Educational Nature of Educational Broadcasting Stations, 90
FCC 2d 895 (1982) (hereafter referred to as "1982 Order"; Second Report and Order, 86 FCC 2d 141 (1981); First Report
and Order and Notice of Proposed Rulemaking, 69 FCC 2d 200
(1978).

Recent cases before the Commission indicate that some
noncommercial broadcasters have aired outright commercial messages on behalf of profit making
entities in violation of our rules and the statute (footnote omitted). As our action in those
cases attest, we will enforce our prohibition on the broadcast of commercial messages on behalf
of profit making enterprises for which consideration is paid to the station.
Information brought to the attention of the Commission regarding such practices will be
scrutinized and licensees found to have engaged in them will be sanctioned.

Beyond the airing of paid promotional announcements, our recent review of underwriting
activities indicates that some public broadcasters may be airing donor and underwriter
announcements which exceed the Commission's guidelines. In light of these instances and
an ongoing debate in the public broadcasting community on these issues, we believe that a
brief statement concerning the obligations of public broadcasters with respect to donor and
underwriting acknowledgements is appropriate. In March 1984, we
relaxed our noncommercial policy to allow public broadcasters to expand or
"enhance" the scope of donor and underwriter acknowledgements to include (1) logograms
or slogans which identify and do not promote, (2) location information,
(3) value neutral descriptions of a product line or service, and (4)
brand and trade names and product or service listings. 1984 Order
at 263. That action was taken as another step in our ongoing effort to strike a
reasonable balance between the financial needs of public broadcast stations and their obligation
to provide an essentially noncommercial service. It was our view that "enhanced
underwriting" would offer significant potential benefits to public broadcasting in terms of
attracting additional business support and would thereby improve the financial
self-sufficiency of the service without threatening its underlying noncommercial nature. In this
regard, we emphasized that such announcements could not include qualitative or
comparative language and that the Order should not be construed as allowing
advertisements as defined in Section 399B of the Communications Act. Id.(Footnote 1)

We recognized in our 1982 Order that it may be difficult
at times to distinguish between announcements that promote and those
that identify. For that reason, we expressly stated that we expect public broadcast
licensees to review their donor or underwriter acknowledgements and make reasonable good
faith judgements as to whether they identify, rather than promote. 1982 Order at
911. We saw no purpose at the time, or at the time we adopted our
1984 Order, in fashioning rigid regulations or guidelines to
ensure the noncommercial nature of public broadcasting, and we were concerned that such guidelines
would inhibit public broadcasters' ability to seek and obtain the
funds needed to present quality programming and to remain financially viable. It
continues to be our view that the public broadcaster's good faith judgement must be the key element
in meeting Congress' determination that the service should remain free of commercial
and commercial-like matter. In response to requests for guidance, however, we will
attempt to further clarify the guidelines applicable to public broadcasters' exercise of
their discretion.

We reiterate that acknowledgements should be made for identification purposes only and
should not promote the contributor's products, services, or company. For example, logos
or logograms used by corporations or businesses are permitted so long as they do not
contain comparative or qualitative descriptions of the donor's products or services.
Similarly, company slogans which contain general product-line
descriptions are acceptable if not designed to be promotional in nature. Visual depictions of
specific products are permissible. We also believe that the inclusion of a telephone
number in an acknowledgement is within these general guidelines and, therefore, permissible.

Several examples of announcements that would clearly violate the
rule may be helpful:

A. Announcements containing price information are not
permissible. This would include any announcement of interest
rate information or other indication of savings or value associated with the product.
An example of such an announcement is:

-- "7.7% interest rate available now."

B. Announcements containing a call to action are not
permissible. Examples of such announcements are:

-- "Stop by our showroom to see a model";

-- "Try product X next time you buy oil."

C. Announcements containing an inducement to buy, sell,
rent, or lease are not permissible. Examples of such announcements
are:

We repeat that the Commission will continue to rely on the good faith determinations of
public broadcasters in interpreting our noncommercialization guidelines. We emphasize,
however, that we will review complaints and, in the event of clear abuses of discretion, will
implement appropriate sanctions, including monetary forfeitures.

We have reviewed the Commission's policies regarding the offering of program-related
materials. We have looked carefully at this area because it has
come to our attention that such offerings have been used by noncommercial educational
licensees to raise funds for program acquisition purposes, a novel fund raising device.

Our 1982 Order dealt with the sale of program-related materials. It concluded
that because Congress has approved direct promotional fundraising announcements by
nonprofit organizations, public broadcasters could air announcements promoting
program-related materials sold by nonprofit organizations,
including the station itself. 1982 Order at 907. It is our belief that in
order for the audience to be informed about the sponsor of these offerings, the
nonprofit organization sponsoring the offering should be clearly identified in the
announcement, a requirement in keeping with the mandate of Section 317 of the Communications Act
and Section 73.1212 of our rules.

Guidelines covering announcements for the sale of program-related materials by for-profit entities were not changed by our 1982 Order. Thus, such
announcements are permitted so long as the licensee

receives no consideration for the
announcement; and

the materials are offered on the basis of public interest
considerations and not the private economic interests of the offeror; or

the price of the
materials offered is only nominal.

Second Report and Order, 86 FCC 2d at 152. As noted above, the nominal price requirement
does not apply to offerings sponsored by nonprofit entities.

Know When to Say No: Underwriting Controversies, Remarks delivered by Kenneth M. Scheibel,
Jr., Senior Attorney Advisor in the Mass Media Bureau's
Enforcement Division to the 1999 National Public Radio Conference in Washington,
D.C. on May 15, 1999.

(a) For purposes of this section, the term "advertisement" means
any message or other
programming material which is broadcast or otherwise transmitted
in exchange for any remuneration, and which is intended --

(1) to promote any service, facility, or product offered by any
person who is engaged in such offering for profit;
(2) to express the views of any person with respect to any
matter of public importance or interest;
(3) to support or oppose any candidate for public office.

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